How to Donate: Increase Merit and Reduce Taxes

It's the end of the year, a time for merit-making and spiritual practices to seek blessings for good fortune in the upcoming New Year, hoping that misfortunes and negative events will end with the passing of 2025.

Donations not only generate merit but also grant tax deduction benefits. There are two types of donations eligible for tax benefits:

1. Donations eligible for tax benefits under the "Pay 1, Get 2" scheme. In simple terms, this means a tax deduction of twice the donated amount, but not exceeding 10% of net income after deducting expenses and other allowances. The "Pay 1, Get 2" donations include the following:

• Donations to public hospitals qualify, whereas donations to private hospitals are not tax-deductible.
• Donations supporting education are eligible whether given to public or private educational institutions, including universities, for the following expenses:
• Provision or construction of buildings, buildings with land, or land for educational use by the institution.
• Provision of educational materials such as textbooks, academic books, media, educational technology, and other related educational equipment.
• Hiring teachers or providing scholarships, as well as funding for invention, development, research, or study for students of the institution.

Some may wonder if donations to parents and teachers associations can be used for tax deductions. The answer is no. Also, payments for school fees, tuition, or registration fees are not tax-deductible donations because these payments are not considered donations.

Donations to tutoring schools or private coaching centers are not tax-deductible because such institutions are not recognized as educational institutions by the Revenue Department’s definition, which includes government schools, government agencies’ schools, private schools established under the Private School Act, or private higher education institutions established under the Private Higher Education Institutions Act.

In summary, to qualify for double tax deductions, donate to public hospitals or schools, whether public or private.

2. Donations eligible for tax benefits under the "Pay 1, Get 1" scheme. Simply put, you receive a tax deduction equal to the amount donated. For example, donations to temples, foundations, or educational institutions beyond the previously mentioned purposes qualify for a deduction equal to the donation amount, limited to 10% of net assessable income after deducting expenses, other allowances, and "Pay 1, Get 2" donations.

Thais often donate to temples and receive donation certificates. However, these certificates cannot be used for tax deduction purposes.

Donations to Christian churches or Islamic mosques located in Thailand can be used for tax deductions.

Donations to shrines, such as Tiger God Shrine or City Pillar Shrine, are not tax-deductible because they are not temples, foundations, or associations designated by the Minister of Finance as public charitable organizations under Section 47 (7)(b) of the Revenue Code.

Here's how to calculate the optimal donation amount for maximum tax benefit, assuming:

Your net assessable income after deducting expenses and other allowances is 1 million baht.

You can donate up to 50,000 baht to schools under the "Pay 1, Get 2" scheme, because by law, the doubled deduction must not exceed 10% of your net income after other deductions (10% of 1 million baht = 100,000 baht).

Remaining net income after deducting expenses, other allowances, and "Pay 1, Get 2" donations is 900,000 baht (1 million minus 100,000 baht).

You can also donate under the "Pay 1, Get 1" scheme up to 10% of 900,000 baht, which equals 90,000 baht.

The taxable income to be calculated after deductions is 810,000 baht (900,000 minus 90,000 baht).

If you donate more under the "Pay 1, Get 2" scheme, for example 100,000 baht instead of 50,000 baht, don't worry. The donation receipt for "Pay 1, Get 2" is still valuable because you can claim only 50,000 baht for double deduction, and the remaining 50,000 baht can be claimed under the "Pay 1, Get 1" scheme. Thus, a donation of 100,000 baht to a school can yield tax deductions of 150,000 baht.

Therefore, if you want to gain merit and save on taxes, you can focus solely on "Pay 1, Get 2" donations. Personally, I currently choose to donate to public hospitals, as they seem more necessary and also offer double tax deductions.

The method of donation is important: only monetary donations qualify for tax deductions. Donations in kind do not (for individuals). It's best to donate via the e-Donation system.

How can we check how much we have donated so far to avoid exceeding limits?

You can verify your donation records using the same username and password you use for filing tax returns online at the Revenue Department website www.rd.go.th through these steps:

1. On the homepage, select e-Donation, then "Check Donation Amount" > Log in.

2. From the menu, select Individual > Check Your Donations (e-Donation) > Log in.

You can check donation records 24/7. The system shows donation date, recipient, amount, and donation channel. If you don’t have an online filing account, you can register by clicking “Register.”

With elections approaching, can donations to political parties be tax-deductible? Yes, up to 10,000 baht of actual donations, provided you have official receipts or other proof of the donation.

Donations made in a given year are deductible in that same year. There are only a few days left this year to donate and save on taxes. Choose your favored causes, increase merit, and reduce your tax burden now.

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